APPENDIX 3
Correspondence from Mr Steve Parry and Mr David Hencke to the Clerk of the Committee
ENTRUST AND THE LANDFILL TAX CREDIT SCHEME
Please find below a short note highlighting issues relating to ENTRUST, Landfill Tax and the Landfill Tax Credit Scheme.
You will be aware that The Guardian submitted a dossier of evidence to the Environment, Transport and Regional Affairs Select Committee and that this was published as part of the Fifth Report of the Committee on 19 March 2001 (HC 36-II, Session 2000-01). The recommendations of the Committee (HC 36-I, Session 2000-01) included the conclusion that:
"the best interests of the Landfill Tax Credit Scheme will be served by the replacement of the regulator, ENTRUST. The new regulator should be closer to Government and will be required to play an active role in steering the credits available into the most appropriate projects (paragraph 155)".
Arising from further evidence supplied by The Guardian the Committee also held an inquiry into misconduct affecting a witness before the Environment Sub-Committee following which the Chairman and Chief Executive of ENTRUST were found to be in contempt of Parliament. Details of this investigation are contained in the Committee's Tenth Report (HC 380, Session 2000-01). The Committee recommended, in light of an unreserved apology, that:
"the House take no further action in this case. Nevertheless, we remain concerned about the conduct of ENTRUST, its Chairman, Chief Executive and Board, and its fitness for the role of regulator of the Landfill Tax Credit Scheme. We are especially disappointed that the Chairman and Chief Executive appear, from the evidence which they gave to us, to take no view on the appropriate strategic direction for the regulator of the Scheme, particularly given the Government's declared intention to review the workings of the Scheme, [19]. For as long as ENTRUST remains the regulator, we—and, we expect, our successors in the next Parliament—will continue to take a close interest in its work. In particular, we expect that our successors will wish to satisfy themselves that ENTRUST has appreciated the need to accept constructive criticism of the sort offered by Dr Aickin and ourselves, and is responding in a more open and positive fashion that has hitherto been the case. Additionally, in view of the comments and recommendations concerning ENTRUST and the Landfill Tax Credit Scheme made by the Comptroller and Auditor General in his recent Report on HM Customs and Excise, we suggest that our colleagues on the Public Accounts Committee may wish to consider undertaking their own investigation into ENTRUST's work".
It would not be appropriate for us to highlight evidence already submitted to the Environment, Transport and Regional Affairs Committee although we would express total agreement with the Committee's recommendation that ENTRUST be replaced. We would also draw the attention of the Committee of Public Accounts to the apparent conflict of interest shown by a previous member of the ENTRUST Board, Mr Roger Hewitt, in that he acted as an adviser to a recipient of Landfill Tax Credits that is currently being investigated for fraud involving around £5 million. A number of people have been arrested and as a consequence this issue was sub judice at the time of the inquiry by the Environment, Transport and Regional Affairs Select Committee. We have been informed that Mr Hewitt is likely to act as a prosecution witness. In addition it may be of interest to the PAC that the ENTRUST Board changed the memorandum and articles of association of the company in order that funds held by the company could be used for purposes other than those laid down by the Landfill Tax Regulations if the regulatory role of ENTRUST was transferred to another body.
Two further issues have been drawn to our attention that may be of particular interest to the PAC.
As a result of being found in contempt of Parliament the ENTRUST Board suspended its Chief Executive, Dr Richard Sills, in April this year. Following lengthy negotiations Dr Sills resigned in July but it has been impossible to obtain details of the agreement reached between the ENTRUST Board and its former Chief Executive. We are concerned at the use of public funds to pay lawyers involved or to provide a "golden handshake".
As the PAC will be aware the Treasury and HM Customs and Excise are presently involved in a review of the Landfill Tax Credit Scheme. We understand that ENTRUST have been involved in a major lobbying exercise, presumably funded through Landfill Tax Credits, to maintain the scheme as it currently exists.
We are obviously more than happy to provide further details if this is useful.
Steve Parry and David Hencke
The Guardian
22 October 2001
Correspondence from Mr Steve Parry and Mr David Hencke to the Clerk of the Committee
ENTRUST AND THE LANDFILL TAX CREDIT SCHEME
Just a very brief note reflecting our concern as to a specific recent development.
As you are aware, the Treasury is carrying out a consultation exercise on changes to the Landfill Tax Regulations and the future role of ENTRUST. This exercise is being carried out by HM Customs & Excise on behalf of the Treasury. Our understanding is that the Environment Select Committee and the NAO concluded that the regulations needed to be changed, that the original legislation was flawed and that ENTRUST required abolition or, at the very least, radical reform. We are now informed that Customs and Excise have agreed a new contract with ENTRUST covering the period 5 October 2001 to 4 October 2004.
Termination requires notice of 12 months. An amazing coincidence for us is that this week we received a British Environment Media Award for our investigation into the LTCS thereby raising awareness of the issues involved to a higher level.
Steve Parry and David Hencke
The Guardian
26 October 2001
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